Our 2002 litigation annual review reported that in 1999, after the introduction of the Woolf reforms, the number of High Court claims dropped by 37 per cent to 72,161 and in 2000 only 26,876 claims were issued. The statistics for 2001 show the decline continued with only 21,613 claims issued. In light of this huge fall in the number of new claims it seems predictable that the courts’ work- load will have shrunk dramatically, so cases should be moving through the courts much faster. But the opposite is happening. So what are the statistics hiding?
The practice of issuing protective writs has virtually disappeared, as has the issue of speculative writs which were never pursued. In addition, issuing High Court proceedings for claims within the County Court jurisdiction has pretty much stopped as it is guaranteed to incur the wrath of the court. These account in part for the reduction in claims issued, as do the Pre-Action Protocols and the emphasis on Alternative Dispute Resolution (ADR). So why is it that the average time between issue and the start of trial is currently 3 years and 17 days, 11 days longer than in 1995 when the court had nearly three times the number of claims?
It is clear that two of the primary objectives of the Woolf Reforms, to speed up litigation and thereby reduce its cost, have still not materialised. Many practitioners have expressed the view that post-Woolf litigation takes longer and costs more because of the emphasis on pre-action procedures requiring cases to be thoroughly prepared before litigation can start. Old-style litigation, where much of the evidence was collected shortly before trial and only expert evidence was disclosed in advance, was cheaper. The front-loading required to comply with Woolf sets the tone for thorough preparation throughout the process and it is neither quicker nor cheaper. It should also be borne in mind that the statistics ignore the three to six months it typically takes to get through the pre-action procedures.
However, the number of cases actually going all the way to trial is falling as ADR is being more heavily promoted by the courts. This is reflected in the increase in numbers of decisions published last year involving mediation, for example.
- In Cable & Wireless plc v IBM UK Ltd, contrary to previous rulings, it was decided that if an ADR clause provided for the parties to mediate before issuing court proceedings, like an arbitration clause, it was enforceable. In a major boost for ADR the judge commented that such a clause could even be enforced by an injunction.
- In Dunnett v Railtrack, Railtrack was successful in its defence at first instance and on appeal. Surprisingly, the court refused to order the losing defendant to pay Railtrack’s costs because of Railtrack’s earlier refusal to agree to the claimant’s suggestion of mediation.
- In Société Internationale de Télécommunications Aeronautiques SC v Wyatt Co, by contrast with Dunnett, on the particular facts the judge concluded the winning claimant should not be deprived of a portion of its costs for refusing to mediate.
- In re Ciro Citterio Menswear plc the Court of Appeal indicated that it was not going to hold a mediation agreement reached by litigants to be binding. The mediation had resulted in an agreement but when asked to approve the subsequent Tomlin Order the court rescheduled the case for hearing despite the fact that an agreement had been made. The company contended it was not bound by the terms of settlement but following a further hearing the court upheld the settlement agreement made at the mediation.
- In Hurst v Leeming the losing claimant argued that no costs order should be made against him because the defendant had refused to mediate. The judge dismissed four of the defendant’s excuses but he accepted the fifth, that there was no real prospect of a successful outcome to the mediation.
So what do the statistics relating to mediation reveal? Unfortunately, another confusing story. In May 2002 CEDR Solve reported commercial mediations were down 28 per cent, mirroring reports from other providers. There is little doubt that the previous year’s figures were distorted by the rush of mediations instituted following the introduction of the reforms. In addition, in large commercial disputes the market is maturing rapidly and the practice of appointing mediators direct, means that the ADR providers’ statistics alone are not a reliable source of evidence as to whether ADR is growing or declining. Anecdotal reports suggests it continued to grow strongly last year and this is reflected in our own statistics.
The leading ADR providers are facing much stiffer competition as new providers appear. This has led to the formation of a trade association, the Civil Mediation Council, to lobby more effectively on behalf of the industry. The fact that the market is maturing can also be seen in the publication of a Green Paper by the European Commission consulting on whether harmonisation of laws relating to ADR would be a good idea. Judging from recent comments, the EU Commissioners seem intent on issuing a Directive despite the fact that the ADR movement is barely established in many EU jurisdictions, and being over-prescriptive at this early stage of its development could be harmful. Consultation across the CMS offices in Europe showed a strong preference for no regulation at this stage.
If there were to be any harmonisation, the area in most need for consideration is confidentiality and privilege in mediations. The approaches to these crucial issues are fundamentally different and are likely to cause problems when using mediation in cross-border disputes. The United States, where the ADR movement began over 10 years ago, has far more experience of these issues and had a not dissimilar problem caused by differences of approach adopted by its State legislators and judiciaries. The debate as to the need for harmonisation has only recently concluded with agreement to adopt a Uniform Mediation Act which seeks to achieve a consistent, national approach to the related core issues of confidentiality, privilege and admissibility. Preferably the EU will let ADR develop unfettered and any requirement for harmonisation will be limited to these core issues.
Anecdotes also suggest that the use of ADR in international disputes has grown but there is little hard evidence against which to test this. The ICC introduced its own ADR Rules in 2000 and in its latest annual report, for the first time, published ADR statistics showing it received 14 requests for “Amicable” Dispute Resolution or Conciliations during 2001.
As to International Arbitration, it is steadily growing as a direct consequence of globalisation. Central and Eastern Europe has attracted a great deal of investment over the past 10 years and the standard practice has been to provide in the contract that any dispute arising be arbitrated, rather than litigated through the local courts. It is therefore no surprise that the ICC’s statistics show that, while the number of international arbitrations has been rising slowly for the last 4 years, in 2001 the number of disputes involving Central and Eastern Europe rose by 68 per cent. Arbitration suffers from many of the problems of cost and delay associated with litigation, so it is only to be expected that ADR will be used increasingly in resolving international disputes.
For further details please contact Tim Hardy at tim.hardy@cms-cmck.com or tel +44 (0)20 7367 2533.
